The FBI recently released a Fraud Warning that reverse mortgages are being used to target scams involving seniors. This is the real thing, most news stories talk about how the senior is being taken advantage by the lender or loan officer when in fact most of those cases turn out to be that the borrower was talked into putting the funds into an annuity or some other investment. In these cases the borrower never loses money they just limit their access.
In this case the FBI warning points out the real problem is that Builders, Realtors and others talk the senior into buying a house with nothing down and it is really a property flipping scam that enriches the person flipping the property. It is totally illegal and I have had one case where I had to turn a senior and their builder friend into the FBI and the HUD Inspector General. My company has had several other inquires but we can tell very quickly now when it is a scam.
The key strategy is to recruit the senior to become a party to the scam and cheat the lender out of money that goes to the person doing the flipping, the benefit to the senior is that they are told they will end up with the home for free. The scam artist are even running ads and putting on seminars saying that you can get a home for free.
The unfortunate part to this whole thing is that it will give a product that does so much good for so many honest senior citizens another black eye. The reverse mortgage is helping many older American’s to keep their homes and to live more comfortable lives; these types of scams are run by a few and end up creating problems for the majority of people that really need it.
If you know someone that is 62 or older and they are either thinking about getting a Home Equity Conversion Mortgage or you think they could live a more fulfilling life if they got one, help them do some research and find a reputable lender to work with. My firm is in 22 States and of course we would love to help but there are many good quality lenders you can work with. Call a few and see if they will give you specific details over the phone, if they won’t you should keep looking, we give complete quotes and detailed information to folks even if they are in a State we cannot lend in.